Is personal income tax withheld from vacation pay?
Almost all income of an individual received at his place of work is subject to personal income tax.
Exceptions are given in Art. 217 Tax Code of the Russian Federation. Payments related to vacations are not included in the specified list; therefore, personal income tax is withheld from vacation pay. Tax withholding generally occurs at the time the income is issued.
A ready-made solution from the ConsultantPlus reference and legal system will tell you how to properly withhold personal income tax from the income accrued in favor of the employee by the tax agent. To study the material, use free demo access.
When should vacation pay be issued? According to labor legislation (Article 136 of the Labor Code of the Russian Federation), vacation pay must be paid to the employee no later than three calendar days before the start of the vacation. That is, if a person goes on vacation on Monday, then he should receive the money at least on Thursday. If the vacation begins on Wednesday, then vacation pay must be issued before the weekend, Saturday-Sunday. Failure to comply with the established deadlines can lead to negative consequences in the form of significant fines imposed by the labor inspectorate in accordance with paragraph 6 of Art. 5.27 Code of Administrative Offenses of the Russian Federation.
Our readers can familiarize themselves with all types of sanctions for late payment of vacation amounts in this article .
Tax deduction from vacation pay
The use of tax deductions when calculating income tax on vacation pay is one of the most insidious aspects in the procedure for calculating the amounts due for payment.
Since a standard or social deduction is applied on a monthly basis, the fixed amount of such a deduction reduces the tax base only in the period in which the payment to the employee occurred. Here's an example:
In May 2022, the storekeeper of Prioritet LLC, P.V. Volodin, was accrued vacation pay from 05/16/2021 to 06/14/2021 in the amount of RUB 20,950.00. Moreover, for the period from 05/01/2021 to 05/15/2021, the employee’s earnings amounted to 10,400.00 rubles. The child tax deduction used by Volodin P.V. is equal to 1,400 rubles. Let's calculate the personal income tax payable:
Salary tax: (10,400.00 – 1,400.00) × 13% = RUB 1,170.00.
Tax on vacation pay: 20,950.00 × 13% = 2,723.50 rubles.
Total personal income tax: 1,170.00 + 2,723.50 = 3,893.50 rubles.
ATTENTION! According to clause 6 of Article 52 of the Tax Code of the Russian Federation, personal income tax is paid in full rubles. An amount of less than 50 kopecks is discarded, and 50 kopecks or more is rounded up to half a ruble. Thus, the total amount of tax to be transferred according to the example will be 3,894 rubles.
Of this amount, the first part of the tax (RUB 1,170.00) must be transferred - if the salary payment is due by the 10th day of the next month - by 06/11/2021 inclusive, and the second part - by 05/31/2021.
How to calculate personal income tax on vacation pay in 2022
Vacation pay is subject to personal income tax at standard rates:
- 13% - for payments in favor of residents;
- 30% - for “non-resident” payments.
From 2022, a new rate has been approved for income exceeding 5 million rubles. per calendar year. In this case, the amount of excess in 2022 and 2022 is calculated from individual income groups of residents. Dividend payments are allocated to one group, and salary payments to the other. Vacation pay along with sick leave belongs to the second. When the total amount of salary, vacation pay, sick leave, bonuses, etc. during the tax period (year) exceeds the above value, then the tax on the excess amount will be calculated at an increased rate - 15%.
An example of calculating personal income tax at a progressive rate of 15% is presented in a typical situation K+. To view the article, sign up for trial access to the system. It's free.
When calculating personal income tax on vacation pay, the accountant will provide the employee with all the required deductions:
- standard - if there is a right to them and the employee’s application;
- social and property - also in the presence of an application and tax notice.
Deductions are provided monthly on an accrual basis from the beginning of the year. And if an employee receives both vacation pay and salary for one month, then only one deduction will be provided - to the total amount of monthly income, and not two - to each type of income separately.
Example:
Ivanov N.G. will rest from June 21 to July 18, 2022. The accountant accrued him vacation pay of 30,000 rubles, which was issued on June 17. The employee has the right to a standard child deduction in the amount of 1,400 rubles. When paying money, tax of 3,718 rubles was withheld from Ivanov N.G. ([30,000 – 1400] × 13%). He received in his hands: 26,282 rubles. (30,000 – 3,718). When next month the accountant calculates personal income tax from Ivanov’s salary for the period worked from June 1 to June 20, he will again deduct 1,400 rubles. will not be provided.
What is the deadline for transferring personal income tax from vacation pay?
So, the money for vacation has been paid, the tax on it has been calculated and withheld. Next, the accountant may wonder when to transfer personal income tax from vacation pay to the budget?
Until 2016, this issue was not regulated in any way by the Tax Code. All actions related to the transfer of personal income tax from vacation pay were carried out in accordance with written explanations from officials of the Ministry of Finance and judicial practice. At that time, the code determined the only deadline for transferring taxes to the budget - the day when cash was withdrawn from the bank to pay salaries to employees, or the day when the funds were transferred to employees’ accounts. Regarding the deadline for paying personal income tax on vacation pay, officials adhered to exactly this position.
However, Federal Law No. 113-FZ dated May 2, 2015 significantly changed the procedure that was in effect previously. From January 1, 2016, from the beginning of the updated version of clause 6 of Art. 226 of the Tax Code of the Russian Federation, the answer to the question: “When is personal income tax paid on vacation pay?” - unambiguous: no later than the last day of the month in which the vacation pay was issued. There is only one exception to this rule - when the last day of the month falls on a weekend or holiday. In this case, the deadline is moved to the next business day.
Important! Due to the introduction of a non-working days regime, personal income tax on vacation pay for October 2022 can be transferred until November 8 inclusive. The payment deadline has been extended for “presidential” non-working days. If an additional lockdown is introduced in a region, it does not extend the payment deadline.
Example:
V.V. Smirnova’s vacation begins on July 5, 2022. It will last until August 1st. Vacation pay was issued to her on July 1 minus withheld tax. The deadline for transferring personal income tax on vacation payments will be August 2, since July 31, 2022 falls on a day off—Saturday.
Vacation pay calculation
In Art. 115 and 122 of Chapter 19 of the Labor Code of the Russian Federation indicate that an employee must be annually provided with paid leave in the amount of 28 calendar days, and the right to use leave for the first year of work arises for the employee after 6 months of continuous work with this employer.
For certain categories of employees, the right to vacation may arise before six months of work. These include:
- women who go on maternity leave;
- workers under 18 years of age;
- employees who adopted a child (children) under the age of 3 months, etc.
Vacations for the second and subsequent years of work can be granted to an employee at any time of the working year in accordance with the vacation schedule established by the employer.
It is important to note that only employees employed under an employment contract have the right to annual paid leave at the expense of the employer. Employees under civil law contracts do not have such a right, since their activities are regulated by civil law, not labor law.
Vacation payments are calculated based on data on average daily earnings, which are calculated for the last 12 months preceding the month the employee went on vacation, and then the average daily earnings are multiplied by the number of calendar days of vacation (D):
CO = SDZ × DO
Where SO is the amount of vacation pay, SDZ is the average daily earnings, DO is the number of calendar days of vacation.
In accordance with Article 136 of the Labor Code of the Russian Federation, the employer is obliged to pay vacation pay to the employee no later than 3 days before it starts (3 calendar days are allowed).
Vacation pay can be paid to the employee in the form of income in cash, either in cash or by bank transfer.
Compensation for unused vacation - procedure for withholding and transferring personal income tax
It often happens that a person quits, but at the same time he has several vacation days left. In such a situation, the employer is obliged to accrue and pay compensation to the resigning employee for unused vacation. Let us immediately note that these are two completely different types of payments. The income codes for them in the income certificate submitted to the tax office as part of the 6-NDFL calculation and issued to the employee differ from each other. So, for vacation pay, the personal income tax code in 2022 takes the value 2012, and for compensation for unused vacation - 2013.
Withholding tax on compensation does not differ from withholding tax on other income, i.e. the employer withholds personal income tax directly when issuing compensation amounts - most often on the day of dismissal. But the procedure for transferring taxes to the budget will be different. Personal income tax must be transferred from compensation for unused vacation on the next working day after it is issued to the employee or transferred to the card. Transferring tax to the budget on the last day of the month (except for cases when the last day of the month is the next working day after payment of compensation) is a delay for which the tax agent will be held responsible.
Responsibility for missing the deadline for paying personal income tax on vacation and compensation payments
If the deadline for paying personal income tax on vacation pay or compensation for unused vacation is missed, the tax agent will be punished. The tax office will collect from him:
- The amount of arrears in the form of underpayment of personal income tax from vacation.
- Penalties accrued on the amount of arrears.
- A fine of 20% of the amount that should have been withheld/transferred to the budget.
Punishment in the form of a fine for unpaid personal income tax will not follow under certain circumstances:
- when income is paid in kind and the tax agent is not able to withhold tax from it;
- when the employer independently identifies an error before it is discovered by tax inspectors and submits corrective reporting 6-NDFL, having previously paid additional tax with penalties.
Thus, in order to avoid penalties and conflict situations with regulatory authorities, the tax should be carefully calculated, fully withheld from the taxpayer’s income and promptly transferred to the budget system of the Russian Federation.
How to show carryover vacation pay and their recalculation?
How to reflect vacation pay that transfers to another month or quarter in form 6-NDFL? This is done according to the general rules:
- accrual of income in the form of vacation pay and related tax, regardless of which period they relate to, in accordance with the actual date of these accruals and the payment deadline established for them will fall into the general figures of section 2 of form 6-NDFL;
- payment of vacation pay will be shown in section 1 of form 6-NDFL for the period of personal income tax withholding, with details by tax payment deadline.
For an example of filling out 6-NDFL for carryover vacation pay, see ConsultantPlus. Trial access to the system is free.
The need to recalculate vacation pay after submitting reports with data on it may arise in 2 situations:
- An error was made when calculating vacation, and incorrect data was included in the report. In this case, you must submit an updated 6-NDFL report with the correct information in it.
- The recalculation has statutory reasons and is legally carried out later than the initial calculation of vacation pay (for example, when recalled from vacation, upon dismissal, when vacation is postponed due to untimely payment of vacation pay). In such a situation, data on it can be included in the corresponding lines of the report for the period in which the recalculation was made (letter of the Federal Tax Service dated May 24, 2016 No. BS-4-11/9248, Federal Tax Service for Moscow dated March 12, 2018 No. 20-15/049940 ).
See also “Clarification 6-NDFL: when not needed when recalculating vacation.”
How to reflect study leave in 6-NDFL was explained by N. N. Taktarov, 3rd class adviser to the State Civil Service of the Russian Federation. To do it right, get a trial online and study the official's opinion for free.
Results
So, in the article we figured out whether income tax is taken from vacation pay. Yes, it is taken, since vacation pay is not included in the list of income exempt from personal income tax. We also found out when to pay personal income tax on vacation pay in 2022. No later than the last day of the month in which the corresponding payments were made to the employee. If the end of the month falls on a weekend, then the transfer to the state treasury can be delayed until the next working day without sanctions.
Please note that late payment of income for vacation, failure to withhold tax from it, and delay in transferring personal income tax to the budget are punishable. In the first case, there is a violation of labor laws, in the others - tax laws. Fines and penalties negatively affect the financial condition of the enterprise. To avoid them, it is necessary to comply with the requirements established by law and monitor changes occurring in it.
Sources:
- Tax Code of the Russian Federation
- Labor Code of the Russian Federation
- Code of Administrative Offenses of the Russian Federation
You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.
What is the difference between vacation pay and sick pay in terms of personal income tax?
Form 6-NDFL, along with regular payments subject to personal income tax, includes vacation pay and sick pay. Unlike wages paid every half month (Article 136 of the Labor Code of the Russian Federation), they are calculated:
- vacation pay - when taking a vacation with payment no later than 3 calendar days before its start (Article 136 of the Labor Code of the Russian Federation);
ATTENTION! In order not to make a mistake with the date of payment of vacation pay and not to incur a fine from the labor inspectorate and interest for late payments to employees, read our publication “If vacation is from Monday, you cannot issue vacation pay on Friday.”
- sick leave - within 10 calendar days after receiving the relevant document from the employee and is paid along with the next salary (Clause 1, Article 15 of the Law of the Russian Federation “On compulsory social insurance in case of temporary disability and in connection with maternity” dated December 29, 2006 No. 255- Federal Law").
IMPORTANT! Starting from 2022, the employer pays only the first 3 days of sick leave and some benefits. The remaining payments are made directly by the FSS.
If there are differences in the timing of accruals and payments for vacation and sick leave, there are the same rules for determining:
- the date of recognition of income as received for the purposes of calculating personal income tax - it corresponds to the date of payment of income (subclause 1, clause 1, article 223 of the Tax Code of the Russian Federation);
- deadline for paying personal income tax - this is the last date of the month in which payments were made (clause 6 of article 226 of the Tax Code of the Russian Federation).
Regarding the last period, vacation pay and sick leave differ from all other income, personal income tax on which must be paid no later than the first working day following the day of payment (clause 6 of Article 226 of the Tax Code of the Russian Federation).
Because of this feature, in 6-NDFL, vacation and sick leave in most cases will be shown separately from other payments.
About the features of accounting for salary advances in 6-NDFL, read the article “How to correctly reflect an advance in the 6-NDFL form (nuances)?” .
